The U.S. Department of Commerce strikes hard! Canadian softwood lumber faces a new round of high tariffs

2024-08-20
tariff, Canada, USA, cork

The U.S. Department of Commerce (DOC) has published new anti-dumping and countervailing duty rates on imported Canadian softwood lumber products in the Federal Register. The finalized rates from the fifth administrative review will take effect on August 19, 2024, and the overall tariff level will increase from the previous 8.05% to 14.54%.

According to CBCReport, the U.S. Department of Commerce (DOC) has published new anti-dumping and countervailing duty rates on imported Canadian softwood lumber products in the Federal Register. The finalized rates of the fifth administrative review will take effect on August 19, 2024, and the overall tariff level will increase from the previous 8.05% to 14.54%.

Background on the US imposition of tariffs on Canadian softwood lumber

The dispute between the United States and Canada over the softwood lumber trade has been going on for decades. At the heart of the issue is the United States' accusation that Canada unfairly subsidizes softwood lumber.

The United States considers Canada's "stumpage fees" on softwood lumber to be an unfair subsidy. Land rents are fees that lumber companies pay to harvest timber from Canadian government-owned land. In contrast, most U.S. timber comes from private lands and is harvested at market prices.

The United States claims that Canada's timber industry receives government subsidies. The Office of the United States Trade Representative (USTR) said the tariffs were intended to level the playing field between the two countries.

The United States can impose countervailing duties under its trade remedy laws on foreign trade that benefits from subsidies. However, Canada objected, arguing that Canadian lumber supplies a wide range of industries, lacking specificity and therefore not eligible for countervailing duties.

The U.S. Commerce Department is responsible for determining whether goods are sold at less than fair value or benefit from subsidies. The United States has had tariffs on Canadian lumber since 2017.

LumberFlow Interpretation

The tariff will force Canadian producers to look more toward domestic and overseas markets.Grades 2, 3, and 4 may become more available in the export market.

The final tax rates are shown in the following table:

company	Anti-dumping duty rate	Countervailing duty rate	Total tax rate
Canfor	10.44%	6.14%	16.58%
West Fraser	5.32%	6.85%	12.17%
JD Irving*	7.80%	3.88%	11.68%
Tolko*	7.80%	9.61%	17.41%
other	7.80%	6.74%	14.54%

Final tax rate table

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